crazy. thank you to both of you for coming on. we will see you right eye care tomorrow for our final edition before our thanksgiving big addition. "the willis report"'s coming up next. gerri: hello, everybody, i am gerri willis. corruption, criminal charges and hundreds of thousands of dollars in ill-gotten gains. not talking about the underworld of mob bosses, i'm talking about wall street. the biggest insider trading case ever. coming out just as individual investors across the country getting more and more comfortable investing in the stock market again. a former hedge fund manager

making over a quarter billion dollars. the former chairman of the sec, harvey pitt and doug burns. welcome to you both. i want to go over a couple of facts in the case as we know it right now, which is not everything, not by a longshot, but here's what we know. a hedge fund manager receives insider information, secret trials. an alzheimer's drug. he finds out the results before anybody else and trades on it. he sells his stakes in a couple of drug companies and assures them. you have said both wall street has developed a reputation of not caring, which individuals make of this story? >> theefact is terrible economic conditions, that is what we have caused some people to try to cut corners or look for advantages. this will not sit well with individual investors, nor should

it. this is blatant conduct at least if alleged, and if it is proven, this individual will do a substantial amount of jail time. gerri: of course you would not excuse anybody for doing something like this because of economic conditions are bad, having said that though, turnin3 to you because you have prosecuted these kind of cases before. here's what the special agent in charge had to say. and on holy alliance between insider willing to divulge valuable nonpublic information and a money manager to whom that information is as good as gold. these are tough cases to prosecute, right? >> he is right, when you're in very tough economic times, sometimes you see an increase in this kind of behavior because we're in for old times. gerri: you can go to a judge.

>> talking about the larger policy situation that sets this up. i often say very hard times will soon increase in white-collar crime. in proving the case. gerri: how hard are these cases to prove? >> we saw where tap, that's cases on appeal and the issue on appeal will involve the wiretap issue in specific it is not listed as a crime, getting complicated. in this case

anyone has with seeing somebody at the center of a criminal scheme get away with it, at least in that respect. the government has to make this case. this is a big one, they need to stress the point, and i think this is what they felt they had to do in order to ensure themselves a successful prosecution. gerri: and they have a great track record. 410 individuals and entities have been charged, has 75 million in illicit gains total so far. something that just wrote this afternoon, the sec spokesman now, the company that owned the fund this particular trader work for. here's what they had to say this afternoon. referencing their ceo, they are confident they have acted appropriately and will continue to cooperate with the government inquiry. our own charlie gasparino has been doing great reporting on this, he interprets the statement to me that they are

knowledge and they're being investigated. when you read that statement the same way, doug? >> i read through the complaint, actually. i had an erroneous report that he was specifically named in that document. he is not. gerri: whenever asserted that. >> not you. gerri: what about this statement that they are confident that acted appropriately and will continue to cooperate with the government inquiry. so charlie gasparino saying they're saying they're being investigated. speak of the statement is really just a generic public-relations statement. are they being investigated? i would have a tough time producing it from that. charlie may have looked at something i'm not looking at. gerri: do you believe it is

possible there is a case being built against him specifically? not just this one trader, who seems to be at the nexus of all this, but his boss, ultimately. >> i think the government is giving off signals, but they are looking at everything surrounding that trader. i think that means before they're finished, they're going to satisfy themselves whether or not they have a case they can bring. i think it is very logical to assume anyone that has even a small attachment to these activities will have been put under the microscope. >> if they have been implicated, they will certainly be concerned. the doctor is the one who turn around and specifically said i'm

going to be speaking at a medical convention of the phase two clinical trials. you have it right from the inside. i am sure there is some culpability, you never know. turn around and try to make a person from today a cooperator. we will see. gerri: one of my big concerns is having an even playing field, not having individual investors feel like they have the last person to any news. how does this go to that issue of your mind? how are we doing making an even playing field for individual investors and professionals? >> i think the government in terms of the regulatory efforts and as well as enforcement efforts are trying to create a level playing field. the truth of the matter is people who have a lot of money to spread around get access to data and information.

it is not enough to constitute inside information, and it is perfectly legitimate. in cases like this at least according to the allegations, if far crosses the line, and people who have money to throw around often get better treatment than the average investor. gerri: last word. >> last word is insider trading is betting on a horse race when you know who won in advance. says there will be a huge negative reports of this political pill incidentally. it is not efficacious, if they do short the stock, it is at a huge cost, it is not fair. gerri: the trader himself got a $9 million bonus. do you think the benefit just went to the company? this guy went and made out like a bandit. thank you for coming on the show, great analysis. now what do you think, our

question tonight, do you have trust in wall street? log onto gerriwillis.com, i will share the results of th at the f tonight's show. lots more still to come including a harsh message from fed chairman ben bernanke who is sick of congress kicking the can down the road. and it was a bad business move and hewlett-packard paying the price to the tune of nearly $9 billion. i will break down what went wrong. stay with us.

gerri: we talk a lot about freedom on this network. the freedom to start your own business, to invest, but with freedom comes responsibility. there's a lot of people just blow it. i'm highly critical of the way government operates and we spent

a lot of time criticizing the feds and state and local governments. some folks in the ceo suite on making some of the same mistakes. you have every reason to complain. case in point today, former ceo of hewlett-packard. no one of my colleagues at fox business nominated him as the worst ceo of all-time. in his rush to write the ailing company, they restructure the legendary pc business and bought a british software company called autonomy. oracle decided to take a pass. hp should have done the same because today it had to take $9 billion accounting charge after finding out they have serious accounting i improprie

improprieties. the write off wiped out the company's profits. at least the traders at jpmorgan lost $5 billion new or taking a gamble. which raises the question, isn't that what due diligence is for and why did two georgian due die failed? the former hp ceo is long gone, about a year, but his legacy continues. followers of his career are not too surprised about this. this is the same fellow booted as ceo the world's biggest business software company after just a year on the job. now while they were at hp, the company reached $30 billion in market cap. that is not a chart to be proud of. again investors have seen it before. he used it as his own personal piggy bank or firing steve jobs

at apple back in 1985. unbelievable. the beauty of the private sector as opposed to the government is when you really screw up, there are penalties. hp stock down 12% today bumping along at the bottom of the 52 week trading range. the fbi is now looking at the case. consequences, the same human behavior but the market has a lot more discipline that is sorely needed in the public sector. and thanks to ray hennessy for inspiring all of this. ben bernanke has strong words for lawmakers and the president fixing the fiscal cliff now or else. details next. i always wait until the last minute.

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said after the speech getting all the attention. next.

gerri: federal reserve chairman ben bernanke speaking today at the new york economic club in new york city, and his message to lawwakers in washington, fix the fiscal cliff and don't kick the can down the road. the commons the fed chief has everybody talking. john, always great to see you. i want you to respond to something the fed chairman had to say this afternoon. listen to this. >> in a worst-case scenario where the economy goes off the broad fiscal cliff, the largest fiscal cliff, don't think the fed has the tools to offset that. gerri: don't look at me, can't do anything if you can't avoid the fiscal cliff.

what did you make of that? speak of the war is quite complicit dumb explicit. if the u.s. goes over the fiscal cliff, the jump in taxes would likely quickly push the u.s. economy into a recession and there is nothing the fed can do to prevent that from happening. gerri: it seems to have unloaded everything they have, the economy has to come back on its own now. >> they can do with the bank of japan is now supposedly considering, resort to negative interest rate policy. consumers would be charged to keep money in savings accounts. that is one way getting people to spend, i don't think that is likely to happen anytime soon. gerri: i think that is just crazy talk to lots of viewers.

but it is reality. instead of getting paid for putting your money someplace, which is the way it normally happens, instead you have to pay for the privilege. now why are people willing to make that trade-off? >> simply because they don't have enough room in their mattress to store their money or they don't have enough confidence to put their money in other financial assets such as stocks. gerri: we are not here yet. >> could be a reality in japan the japanese want to weaken the yen. that is one way of doing it. gerri: he is optimistic about it generally, but your ideas his arctic onto fark face higher inflation. >> i don't think so. my sense is the u.s. economy

remains subject to strong disinflationary forces that still come from the always cheaper and ever increasingly skilled workforces of dynamic emerging market countries such as china and india. in the three months ended october, the average wage grew by only 1.7% year-over-year. that s a record low growth rate for the average wage and as long as wages slow, slow as wage growth is brought in by china and by india, it is very unlikely that the u.s. will suffer from persistently rapid price equations. gerri: were more likely to suffer a recession, and you told our producer on this segment business retrenchment will apply to payrolls. looking at more cutbacks possibly. how deep will it go, do you see

recession on the horizon or are we in it now? >> not quite yet. financial markets are not signaling the recession. nevertheless, we are probably looking at another year of approximately 2% growth, so in all likelihood, this is going to remain the most linked economic recovery since the 1930s. on the inflation front it may be some businesses will try and pass on the higher cost of health care to final crisis, but because of meager wage growth, chances are the price hikes will result in a loss of sales volume or a reduction in real spending. gerri: what happens if we go over the fiscal cliff? what happens to the economy? >> we have gotten some good news out of housing.

we go over the fiscal cliff, that will kill home sales. we will have a return of home price deflation. not only home price deflation, but consumers will also suffer from sharply lower share prices, stock prices, 401(k) plans. coming up in a serious downside to unemployment, could be bad for your health. and waiting until after thanksgiving to talk again. sitting on their teachers at home. the latest next when i'm joined by former cbo director douglas deacon. [ male announcer ] you are a business pro.

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gerri: with all the talk of the

looming fiscal cliff, you would think congress would be hard at work in d.c. negotiating a deal. you would be wrong. they're on thanksgiving recess. if not for the country is facing a financial disaster or anything. oh wait, we really are. joining me now, doug holtz-eakin. former cbo director under president george w. bush. always a pleasure to have you on the show. today the federal reserve chairman ben bernanke warned congress, said look, i can't help you out if you go over the fiscal cliff, there is nothing the federal reserve can really do at this point. do you think congress realizes, understands the stakes here? >> i hope they do, this is a clear and present danger to the u.s. economy and it is not just what happens if we go over the fiscal cliff, it is actually affecting the economy right now. a big drag of business confidence, businesses are already not doing very well, negative investment, really cannot afford to make the

situation any worse and we have heard some members of congress talk about going over the fiscal cliff to teach the other party a lesson. that is not helpful. this is something that should be settled quickly. we know that we're probably going to have higher taxes out of the health care reform. now the payroll tax or they will probably go away. but a premium on in more taxes on the near-term dealing with spending and getting next year without imposing a recession at american public. gerri: you take a lot of time to analyze what happens to this economy if we go over the cliff. is it a big recession, it's a deep recession, what happens? >> it is a deep recession, you hear talk that it is a slow weakening. we can fix it in january and come back. we know the magnitude is large, $395 tax increase, $140 billion spending cuts. more importantly, financial

markets would be shocked at the failure to reach a deal and the fact the political system is so bad in the united states. that kind of confidence is not recovered. we saw it in 2008 i 2008 when te financial and market goes south. we cannot risk that at this point. gerri: you saw that this week, happens over and over again. i would say though it has not moved enough. because here's what is at stake. tax hikes are not income tax hikes, they are taxes on investment. the taxes are dramatic and will dramatically change how people think about investing but it does not seem to me like anybody is really thinking about it yet. >> i have been surprised at how slow this has dawned on the market. now they seem more focused, but i think missing the fact is they have targeted investment, 3.8% investment income, there are

potential for higher income taxes and those tax hikes are layered on top of the peer financial market effects. we did not have the 2008, this is a very dangerous combination. they're really out of luck. gerri: talk about recession. you also have to talk about what happens to the average american psyche if the they're faced with increasing income taxes dramatically so. these are taxes across the board, and investing in texas, where is incentive to work, where is the incentive to invest, get up off the couch? speak of these are dramatically antigrowth policies at a time when growth has to be at a premium, we are going exactly wrong direction. the really frightening thing about this is we know we have a big debt problem. we have known we have to deal with it, it is very unlikely we

will come to terms with a debt and deficit problem in a recession. we have big near-term problems and don't solve the long-term problems. gerri: 50,000 for every american taxpayer. it is pretty frightening. what would you like to hear from the president? he has made it clear it is my way or the highway. >> what he has to express his urgency to get this done and lay out a plan. he is the president of the united states. if we're going to talk about big bargains in solving the debt problem, all we have heard is the tax hikes. what are they spending cuts would actually propose? that is something american people have to hear. gerri: i want to hear about entitlement spending. please come back. have a great thanksgiving. the fiscal cliff mess is going take a bite out of your bottom line when a slew of higher

taxes. those lucky enough to get a year-end bonus, now maybe the time to ask your employer to cut fat check. rich edson joins us from washington. >> the law says taxes are going up. trying to avert the full tax hike so we really don't know who will pay more or if anyone will pay more. one tax expert says a conservative tax play this year means planning for those higher rates. >> you're going to have to maybe assume or gas tax rates will go up rather dramatically for higher income individuals. you might want to consider taking income where you have that option through compensation planning, businesses or where you are on a cash basis to exploit income. >> advisors say take any bonuses before the first of the year is

nearly five percentage point increase in the top income bracket and .9% health care surtax in january. the top rate for dividend jumps to nearly 40%, the health care law adds 3.8% on top of that. take capital gains at the top rate goes, and 3.8% health care tax on top of that. push expenses featuring tax deductions into the future beyond this year. use those seductions next year or after when rates are set to increase. congress could delay much of this, that is all up in the air right now. a second term for president obama means tax increases are much more likely. gerri: thank you for breaking it down for us. happy thanksgiving. >> you as well. gerri: the fiscal cliff to be 41 days away, but thanksgiving is today's from now.

they have not bought your turkey, you may want to get on that. if you remember how much was spent last year, it is about the same. the average cost of thanksgiving dinner will be just under $50. up $0.28 from last year. the reason for that increase, the price of a turkey more than 3% higher than last year. due to the drought in the midwest this summer increasing the price of turkey feed and will probably go even higher next year. if you are serving dinner rolls this year, they're up more than 1% thanks to a rise in wheat prices and a supply shortage a result. mainly because the drought did not really impact idaho. you cannot have thanksgiving dinner without stuffing. the prepackaged cubes, almost 4% less this year.

if you want with cream, that will save you the most thanks to falling dairy prices. may not be good for your waistline but at least it won't hurt your bottom line and once a year, who cares, right? another group that could be greatly impacted if we dive off of the fiscal cliff, and losing her job could hurt more than just your finances. bad for your health. why, and what you need to look for with dr. marc siegel. ♪

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gerri: there's no doubt about it, unemployment hurts. but you might find that increases your chance of having a heart attack. according to a new study by the institute of aging. for more, let's ask dr. marc siegel. this is what i thought was so important and blew me away. the report says job losses pose as big of a threat as smoking and high blood pressure. how can that be true? >> is apples and oranges. they're all bad for you. if you lose your job may be more willing to smoke more in depth even worse, noting the study shows. you sleep less, don't exercise this much, you're worried more. all of them increase the stress hormones in the body and the stress hormones in the body in my opinion increase your heart

rate, blood pressure, and then increase your risk of a heart attack. you don't take care of yourself and you don't have your job. for when you think you might lose your job you're worried about it. gerri: you can see people physically degrade when they're under stress for whatever reason. what is going on with them physically that make that happen? >> we have an emotional center in our brain, people who lose their jobs, they start to have more outpouring of hormones. these hormones increase your risk of heart was pressure, heart attacks and not only that, and make you eat more, you can get an ulcer from it, increase diabetes and cancer from this. this study looked at people over 18 years and more time you lost your job over 18 years the higher your risk of heart attack up to 60% higher if you lost

your job. gerri: are some of these people could post for heart attack anyway? >> if you are a warrior by nature, don't exercise, if you don't have something to get rid of that stress and it gets bottled up, you increase your stress. i personally think women are better at handling stress, they handle emotions better than men. i was surprised at that finding. i would think women would have less of a problem with heart disease and heart attacks when they have changes in their lives. then put it all in one basket, you're not yourself, you are depressed, a higher risk of heart attack. liz: there are other things that will go wrong. you talk about a range of things that people do.

higher cholesterol. is it possible are at risk for other kinds of diseases? >> high risk of stroke, obesity, high risk of diabetes and cancer, just about any of those major diseases, stroke is the most disabling of all. it is just terrible, people should plan ahead for this because in this economy if you don't lose your job to be stuck in a job you don't want. don't have a lateral movements you want. you need a more positive outlook. gerri: on other people at who don't have a job. what can the i do to reduce that stress? >> i would really urge people to keep their exercise going, to be regularly, well-balanced diet and to get to sleep. if you don't have regular sleep can increase the chance of these medical problems dramatically. get to sleep. gerri: i love sleep and i love eating. so i guess i will be okay. we appreciate your help.

until those are words of wisdom from other people. good to see you. for tonight top five, we decided to have a little fun with the turkey. the top turkey trivia. number five connor family fights over the turkey leg, the tale is actually considered a delicacy in many countries, it is fatty and committed 200 calories. number four can you probably heard of the ground turkey, but while they are young they are called jake and chinese. 10 million wild turkeys can be found in 48 states. you have to order i it if you le in hawaii or alaska. the bird is actually named after the country. the wild turkeys we see in north america are similar or more ande often mistaken for native bird in the country of turkey imported throughout all of europe. the number one turkey trivia is wild turkeys are fast, faster than using both. the fastest man in the world runs 23 miles per hour.

turkeys and the other hand can reach 25. and they can reach speeds of 55 miles per hour in-flight. no word if he can actually fly. that is everything you need to know about your dinner on thursday. still to come, my two cents more on travel. and college savers, something you have to know because there is a big tax coming for you. what families need to know coming next. [ male announcer ] this is the age of knowing what you're made of. why let erectile dysfunction get in youray? talk to your doctor about viagra. ask ifour heart is healthy enough for sex. do not take vgra if you take nitrates for chest pain; it may cause an unsafe drop in blood pressure. side effects include headache, flushing, upset stomach, and abnormal vision. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours.

stop taking viagra and call your doctor right away if you experience a sudden decrease or loss in vision or hearing. this is the age of taking action. viagra. talk to your doctor. gerri: it is the ticking timebomb nobody is talking about. up next, coming up for college students if we go over the fiscal cliff. budgeting tips.

gerri: breaking news for you tonight, an update to the hostess story. the maker of the twinkie. we reported last night the company was given a bit of a retrieve after ben was the judge told the union and the company executives to get back to the bargaining table, and now the "wall street journal" reporting the latest rounds of talks have failed, no hostess says they will proceed with liquidation, hostess was going out of business earlier this week because it could not reach a deal with the bakers union has failed to reach a new agreement in the latest talks and it looks like they will actually close down. we will continue to follow the story as more develops and lets you know the latest. who will be college students, automatic spending cuts and tax increases pose even greater challenges for folks struggling to pay for college.

many wonder if it is even worth it. i'm in now is presiden as presif campus consultant and author of "paying for college without going broke." always good to have you. you talk about the sticker price, you said don't worry about it, why? speak only one third of students and families pay full sticker price. higher education at a discountt3 industry, so two-thirds of the students receive some form of financial aid or receiving tax breaks for the federal state government. gerri: i want to talk about how the fiscal cliff is impacting federal aid and there are surprising things i don't get it got a lot of attention. personal student loan interest deduction is not going away. it is certainly being downsized, can you tell us about that? speak a lot of provisions set to expire so i can go back to the old tax law from many years ago. income thresholds will be less. it used to be unlimited number.

it is limited to the first six months. people roll the debt over a lot, no people have had that debt for 10, 15, 20, 30 years. now pay it off in five years or you will lose your deduction. >> some people may lose seduction are used to have even within that five years because the income thresholds to claim that deduction are going to go back to the old levels, which are about half of the current levels. gerri: also getting downsized or $2500 for the first four years after 2000, tell us about that. >> it is a refundable credit, have no tax liability you can get some. that is scheduled to expire at the end of 2012. they can go back to the hope credit, the first two years,

$1800, but more important, similar to the interest deduction, the income thresholds to qualify for that credit are going to go down. they are much higher for the american opportunity credit. they will go down quite a bit. gerri: if you are one of those parents, see what the college will give you. >> your success will be understanding how you are eligible you determined. in the book we go into detail about the formulas that influence, because how you position your income, or asset, your debt, can affect your eligibility for assistance so therefore it is important not just fill out the form and hope for the best thing have to be sent before applying for the assistance. gerri: what is the best way to do that?

speak of the best source of money is not from trying to locate private scholarships from a little old lady in iowa giving money to children who'd rather pay piccolo. those kind of scholarships are very small, the major free money comes from the federal government, the pell grant, which is not effective for the fiscal cliff, state grants and also from the colleges themselves, that is where the bulk of the financial aid is coming from. lizgerri: excellent, thank you r coming on. we will be right back with my two cents more. and do you have trust in wall street? [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person,

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most of you got 3 million, according to estimates, will be heading off to visit friends and family. safe travels, good evening, happy thanksgiving. that's my "2 cents more." that's it for tonight. thank you for joining is.